I’ve been waiting for a deeply reported article like today’s Times piece, “In Cramped and Costly Bay Area, Cries to Build, Baby, Build.”
No, not everyone who supports building lots of market-rate housing in San Francisco, asap, is a Reagonomics-spouting spoiled Libertarian who doesn’t understand the values of community and diversity.
And not everyone who opposes lots of market-rate development is a spoiled knee-jerk lefty who doesn’t understand the basics of economics.
Today, at least, the Times seems to get that, and I wish more people did. When I moved back to my native San Francisco a year ago I was a bit shocked to see, close-up, just how bitter the affordable housing debate had gotten. Wading into the argument online about Proposition I, the ultimately failed ballot measure that would have temporarily halted market-rate building in the Mission,* you had to steel yourself. If you said you thought it was a bad idea because it wouldn’t bring down rents, you were a 1% apologist who wanted to whitewash the Mission. If you calmly stated you supported a pause in development so that the community had a moment to strategically respond to the unprecedented pressure on housing costs — without losing its soul — you were an anti-progress oaf who feared change and trafficked in identity politics.
The crazy fact is that while these warring sides apparently despise each other, when you talk about the kind of future they want, many on both sides are chasing the same thing. Practically everyone is disgusted that you have to be rich to move to San Francisco now, that the city has changed from being an outpost of diversity to an exception to the growing diversity in the state, and that the things that made the city so notable as a countercultural mecca are being overshadowed by ritzy eateries and billionaires’ pied-a-terres.
Take this essay by Zac Townsend . If you hate the pro-development crowd, see if you can just digest the vision he has before passing judgment on his proposed solutions. He wants an affordable and diverse city. Don’t most of us?
When I read something like Townsend’s post, I initially find very little to really disagree with. My understanding of economics (and I think at this point in my “career,” such as it is, I can say I’ve got some kind of understanding of economics) is that supply and demand are real forces. They have no moral compass and should not be trusted with shaping society — FOH Ayn Rand — but they are real and you have to contend with them in any policy solution for a malfunctioning market. Low supply and/or high demand will put upward pressure on prices. San Francisco has both. There’s not much you can do about the demand — you can’t easily make people not want to live here. (The guys I saw this week sitting on some steps on Valencia and shouting insults at the people getting off one of the Google buses may disagree.) But you can increase the supply — whether luxury or not — to take some pressure off price. How much supply will reduce the price how much is up for debate, and the subject of plenty of studies.
So basically, I agree with the mechanics of what Townsend argues. You have got to build.
But, but. There are so many buts. And they are legitimate and cannot be written off as bad economics. It’s just not as simple as building more housing, of any kind. Townsend cites New York City as an inspiration. But that city is a great example of how increasing supply sometimes does not push down prices, because it changes the nature of the demand. As CityLab reported last year:
That such a large quantity of global capital is seeking real estate assets in cities like New York, San Francisco, Los Angeles, Miami Beach, Chicago, Boston,Seattle, Washington D.C., Sydney, London, Singapore, and Dubai means that the “laws” of housing supply and demand are not functioning like the simple model presented in an introductory economics textbook. According to the prevailing theory, adding more housing supply at any price point should ease the upward pressure on rents across the board, and ultimately lower prices. But the overseas demand for such housing assets, for both investors and buyers, has of late been basically insatiable. In Manhattan, Billionaire’s Row is one very shiny example.
So there’s this vast global demand for pricey real estate, which will not be satisfied by 5,000 or 50,000 new luxury units. Or, adding such units might bring prices down, but only within the market for luxury apartments.
Another issue is that if you build luxury condos in a non-luxury area, it changes the kind of people who want to live there. This is the classic dance-movie trope wherein an evil developer wants to tear down a community center in the hood to drop a glass-and-steel yuppie hive on top and wipe the community off the map.
(No, I’m not suggesting that we can breakdance our way out of the housing crisis, as amazing as that sounds.)
Would building more lux condos in San Francisco just free up more housing and push the price down? Or would it change the market so much that you’d actually have a new “product” — newly luxury-ized neighborhoods — with prices even higher than before? In economics-speak, this would mean supply goes up but then the demand curve shifts to the right, making the effect on price ambiguous. Both outcomes are possible, actually. I often think that most of SF is so luxury-ized already that it can hardly get worse — the richest people in the world already want to live here. But maybe I’m wrong. A lot of the new buildings that will go up in the next five years are in the southeast of the city, which really hasn’t been luxury-ized that much (last time I use that word, I promise). Those neighborhoods will probably change as a result. I’ll bet that rents may even go up across the board in Bayview as shiny apartments on the water become a more prominent local feature than the Alice Griffith housing projects. That’s what has happened in some New York neighborhoods, where red-hot gentrification continues faster than ever as new lux condos pop up left and right.
Yet another stumbling block for the fast development argument is that San Franciscans in formerly working class neighborhoods are entirely justified in being suspicious of the Build lobby’s insistence that we must not stand in the way of progress. There is something predatory about the kind of change that is happening — has already happened — in the city. The people who might make some of the wealthy newcomers uncomfortable have been chased out. Some days, it feels like they are actually being assassinated. Some of the neighborhoods being unwillingly changed are communities that suffered through decades of official neglect, that years ago were rocked by the crack epidemic and then decimated by the war on drugs, where nonwhite people rented and bought houses with their hard-earned money because they were not allowed to live elsewhere. To acknowledge so little of that history and simply assert, over and over again, the laws of economics can feel like a slap in the face. I believe there may even be a sense in some communities that, spiraling rent be damned, you won’t roll over for a group of people who have no respect for your struggles and sacrifices. (Such an extreme position is only tenable if you’re a home-owner or are lucky enough to have a rent-controlled apartment.)
Finally, the issue of character and quality of life is not as precious and privileged as some of the more vocal YIMBYs would have you think. In fact, the whole NIMBY vs. YIMBY debate can be a total red herring — a lazy shorthand to avoid a drawn-out argument. Is there a time when you’re justified in being a NIMBY? Of course there is. When someone wants to dump toxic waste in your backyard or run a freeway through your local park, you do what you can to avoid that outcome. And San Franciscans have done that pretty successfully for a long time, succeeding in preserving our breathtaking open spaces and shutting down ridiculous mid-century freeway plans. It’s prudent to evaluate measures and projects on a case-by-case basis, rather than resorting to a slogan for making decisions.
It’s tough stuff, and the enmity makes it tougher. Further, the problem exists throughout the Bay Area. From this crucible of distrust has emerged a situation that is benefitting no one except the speculators. Maybe today’s Times article, which so deftly grasps the complexity of the issue and refuses to demonize any side, can be the start of a more fruitful dialogue.
I mean, that’s probably pathetically optimistic. But it’s given me some new energy to try bring the discussion forward.
*This is such a controversial issue that I won’t be surprised if a commentator takes issue with my summary description of this old-news ballot measure. Like discussing climate warming or Israel-Palestine, there’s no consensus on even some of the most basis facts.